Musings on World events from the perspective of a Social and an Economic Liberal.

Monday, January 08, 2007

The 27 times table

The enlargement of The European Union to include Bulgaria and Romania has not quite been the celebration that the previous enlargement to ten other countries was a couple of years ago. Perhaps this is because to some degree this is an enlargement of the also-rans: the countries that could not make enough changes to get entry in 2004. Perhaps too, by every estimation, there is still considerable work for the acceding states to complete, even after entry. Bulgaria and Romania are a third as wealthy as the EU average, which itself is diluted, since the 2004 entries were themselves only half as wealthy as the EU of 15 states. Bulgaria and Romania are still poor, with weak institutions and considerable problems with corruption and crime. The UK, having opened the door to the 2004 applicants has retained work restrictions on Bulgarians and Romanians (albeit that these restrictions are more cosmetic than real). So this enlargement has been a subdued affair- in keeping with the air of gloom that pervades the European body politic these days.

Meanwhile the fact that the procedures that were designed for a European Union of 12 in 1992 are supposed to function for a Union of 27 has underlined several of the problems of the organisation. Nevertheless, the fact is that the Union is functioning-and still reasonably well- suggests that the pessimists, who insist that without the Constitutional Treaty the EU is doomed to gridlock, my be slightly over plying their hand. Although the majority of the EU members have ratified the treaty- the fact of the rejection by the electorate of two of the founding members: France and the Netherlands is not something that can easily be set aside. Nor should it be, especially as several other countries, including the UK, would find the treaty extraordinarily difficult to ratify, even if France and Holland eventually do so.

The problem of the Constitutional treaty is that it tries to do too many things and satisfy too many constituencies: from dyed in the wool Federalists to Free Traders. Although many of the measures in the treaty are practical, the fact is that the total effect is cumbersome and not focused on the key issue of accountability. The European Union needs reform, but perhaps we should now return to the practical and functional approach of the original six. The political climate is not right, even were it desirable on other grounds, to emphasise the symbolism of Federalism.

The fact is that The European Union is most successful when it devotes its efforts to genuine economic liberalisation: as the single European market has proven. That work is not yet complete- as the absurd protectionism in financial services that continues, following the cynical rejection of 12 years of work on the Financial Services directives has shown. While a reduction in costs and a streamlining of decision making would be welcome, the fact that these measures come wrapped in much symbolic erosion of National Sovereignty has effectively killed off the whole project. Angela Merkel argues that the Treaty should be resurrected, in order to restart momentum in the Organisation. I disagree- of far greater benefit would be the extension of the single market into Finance.

Unfortunately the cynical veto of that legislation came from Mrs. Merkel's own Germany. So it seems that we must go down the cul-de-sac of the Constitutional treaty, before the use of the Union can be proven again, and the gloom begin to lift.